Crude oil (WTI) is lower by 2.57% to $50.11 per barrel and Brent crude is slipping by 2.30% to $57.83 per barrel this morning according to the CNBC.com index.
Oil prices are in the red today as concerns fade over supply disruptions in the Middle East as a result of the Saudi Arabia airstrikes in Yemen.
Goldman Sachs (GS) said that the bombings in Yemen would have little effect on oil supplies as the country is only a small crude exporter and tankers could avoid passing through its waters in order to reach their destination, Reuters reports.
On Wednesday Saudi Arabia announced that it would launch airstrikes against the Houthi rebels in the Yemini capital of Sanna, which continued into Thursday.
Yesterday oil prices skyrocketed due to concerns oil supplies would be disrupted by the fighting.
The bigger impact on oil would come from a nuclear deal with Iran, which could end up resulting in an easing of Western sanctions against Tehran and an increase in its oil reserve exports, Reuters noted.
Separately, TheStreet Ratings team rates ENERGY XXI LTD as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ENERGY XXI LTD (EXXI) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ENERGY XXI LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, ENERGY XXI LTD reported lower earnings of $0.61 versus $1.84 in the prior year. For the next year, the market is expecting a contraction of 536.1% in earnings (-$2.66 versus $0.61).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 3662.4% when compared to the same quarter one year ago, falling from $10.50 million to -$373.88 million.
- The debt-to-equity ratio is very high at 2.64 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.49, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENERGY XXI LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$42.64 million or 127.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: EXXI Ratings Report